Using your semi to haul in a profit

Now that you have a semi on the farm, is commercial grain hauling a viable money-maker?

The next time you find yourself driving down any dirt road on the Prairies, take a look into the first (inhabited) farm yard you pass. And the next one. And the one after that.

Chances are beyond the wind-whipped, tarp-covered shelter, the stock-piled ancient equipment and the friendly farm dog, you’ll notice a big rig. Apparently just sitting there. Maybe still covered with remnants of the last snowfall. Why is that? Why is that truck just sitting there? It’s costing someone money. Could or should it not be put to better use — for something other than a farmyard ornament? I suppose there may be a few things to consider first.

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Semi-trucks have become a virtual necessity in the farm operations of today. Scale dictates that to support itself, a certain threshold of acres must be sown and another “break even” quantity of grain must be harvested. To do this in a timely fashion, the large trucks just make logistical sense. But, you’ve only got so much of your own grain to haul (more so in some years than others), what about working that truck for a neighbour: does it pay?

According to Chad Manz, farmer and budding commercial truck driver, it does. Or, it has. He purchased his super-B trailers late last year. As he sees it, most farms already have semis. Lots of guys will do the short hauls from their yard to the nearest elevator but for those longer hauls, they are looking for the super-B trailers and newer — perhaps more reliable — equipment to get the job done.

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Chad is primarily a farmer, now. Last winter he had off farm employment. He didn’t want to go down that road again, so last fall he made a purchase of brand new trailers and is enjoying some of the benefits of being able to remain in his community: coaching a minor hockey team, playing a bit himself and “staying local.” The daily commute is from his farm yard to any neighbouring farm that requires his services.

At the time of purchase he decided to have everything “safetied” (tested to ensure the vehicle meets safety standards) and put commercial plates on. In the few months he’s been going at this, he’s covered off some of the upfront start-up costs of such a side-business — cost like that of having his truck and trailers safetied and the extra insurance and licensing fees. He’s not out anything. As the opportunity arises, he will capitalize and benefit from the diversification. He’s making his payments, staying close to home and expanding the family farm business with yet another revenue stream.

A new business start up

Eric Micheels, an assistant professor in the Department of Agricultural Resource Economics at the University of Saskatchewan, says this is ultimately a business decision to expand and diversify your farm, or not.

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You do have to be careful — you are working in a localized market. Is there enough business in your area? He says you need to ask yourself some questions, like has anyone beaten you to the punch? How much competition are you facing?

As the potential owner/operator of another business, you have got to consider the business angles before taking the leap. Factors such as labour availability and reliability, paper work, logistics of lining up the day-to-day operations, additional cost of licensing, insuring, fuel (remember, you’ll go from farm-priced diesel to commercial: on any given day this varies by 13 to 15 cents per litre, sometimes more), time management and the wage of whomever you have driving the outfit. On top of that, you’ve still got your farm to consider and your own commodity to haul.

In Manz’ area of Saskatchewan, both of the local elevators are expanding — doubling their capacity from 50 to 100 car spots — and he wanted to capitalize on that. As local capacity grows, so does the area from which to draw business.

If your farm has just one or two employees, the financial input required for larger trailers and the time commitment of long hauls may not be feasible. That’s where entrepreneurs like Chad come in to play. And he’s happy to pick up the work.

The realities of this diversification will take some real consideration, it could very well be worth your time. If you’ve got a good labour pool that you want to maintain throughout “slower” winter months, perhaps this is a method of keeping them on the payroll — maybe year round — to ensure they are there for you when your crunch time comes. There is always potential to expand as your “local” market begins to encompass a larger area. Word of mouth could open doors you never before knew existed.

If you’re entrepreneurial and like the idea of diversifying your farm operation in this manner you’ll also have to become aware of the rules regarding commercial hauling. In Saskatchewan there are all kinds of regulations as to what you can haul, how far and with what vehicles. Different commodities may have different licensing requirements (i.e. fertilizer is different than grain or livestock).

According to information from Kelly Brinkworth, Saskatchewan Government Insurance (SGI) spokesperson, in Saskatchewan Class C is a restricted commercial plate. There are limits on the goods that may be transported for others.

The cost of plating a highway tractor with commercial (class C) plates is more than twice that of putting Class F (farm) plates on. For the 39,900 kg weights, the difference is a whopping $1,330 for farm to $2,900 for commercial. Additionally, the insurance coverage included with the commercial plates is greatly reduced, thus requiring the purchase of additional damage/accident insurance. Another start-up cost is that of having your commercial vehicle pass and maintain all provincial safety standards. It may also be necessary (and wise) to maintain cargo and additional liability insurance as prescribed under “The Safety and Fitness Regulations,” as defined by SGI. But note: if you put commercial plates on your vehicle this does not restrict or limit you from transporting anything from your own farm operation in the now commercially registered vehicle.

The trailer(s) your unit is pulling will also require a class TS (semi-trailer) plate. Again, additional damage coverage would be required to be purchased separately from your plate coverage.

Increased wear and tear on your vehicles and trailers may also become a factor. Is it worth the depreciation? If things are relatively new or solid, it might be. You can use some of your revenue and put it toward an upgraded vehicle. But if the added work load is going to bring in extra dollars only to see them going out again on costly repairs, you may need to make a capital investment to improve your equipment or consider putting your efforts into other areas.

Manz has already overcome that hurdle. After the purchase of the trailers in late 2015, and some experience (and an idea of the market yet to come) under his belt, he purchased a newer highway tractor in January of this year.

As Chad had stated, this year his cash cow has been the large volume of lower quality durum out there. Farmers looking to market the product further from home has kept him on the road with paying customers. What will it be next year? Nobody knows, but in the event of a lost revenue stream, he’ll pull the “C” plates off and put the old girl to bed in his yard — back under the blanket of snow.